Adams Golf, Inc. reported a third quarter net sales increase of 26% to $18.9 million from $15.0 million for the comparable period last year. The company attributed its sales growth to introductions of the Idea a3 and a3 OS Irons combined with the continued strength of the Idea a2 and a2 OS Irons. Overall net income for the quarter was a net loss of $327,000, slimmed from a loss of $500,000 in the year-ago quarter. Earnings per diluted share was a loss of a penny per share compared to a loss of 2 cents per share last year.
Net sales of irons increased 14.1% to $11.3 million, or 59.8% of total net sales, from $9.9 million, or 66.3% of total net sales, for the comparable period of 2006. The increase was primarily generated from the net sales of recently launched Idea a3 and a3 OS irons coupled with the continued sales of the Idea a2 and a2 OS irons and integrated iron sets while the prior period net sales primarily resulted from the Idea a2 and a2 OS irons and integrated iron sets.
Net sales of drivers increased to increased 100% to $3.0 million, or 15.7% of total net sales, for this year's quarter from $1.5 million, or 10.3% of total net sales, last year. A large portion of the driver net sales for the quarter was generated by the Insight driver, which was introduced in the first quarter of 2007 while prior period net sales were driven by the Redline RPM product line.
Net sales of fairway woods increased 85.7% to $3.9 million, or 20.6% of total net sales, from $2.1 million, or 14.0% of total net sales, for the comparable period of 2006. Third quarter 2007 net sales were generated from Insight fairway woods and Idea a3 and a3 OS, Idea a2 and a2 OS, Idea Pro and Tech OS I-woods. Third quarter 2006 net sales were generated from RPM LP fairway woods, Idea a2 and a2 OS I-woods and Original Tight Lies fairway woods.
The company said its is currently dependent on two customers, which collectively comprised approximately 29% of net sales for the quarter. One customer individually represented greater than 5%, but less than 10% of net sales and one customer represented greater than 20%, but less than 25% of net sales.
Cost of goods sold increased to $11.2 million, or 59.1% of total net sales, for the quarter ended September 30, 2007 from $8.6 million, or 57.3% of total net sales, for the comparable period of 2006. The increase as a percentage of total net sales is primarily due to changes in the product mix and seasonality of the business.
Selling and marketing expenses increased to $5.4 million for the quarter ended September 30, 2007 from $4.3 million for the comparable period in 2006. The increase is primarily the result of additional commission expense of $0.5 million as a result of the increased net sales during the period and an increase in marketing and tour player expenses of $0.6 million.
General and administrative expenses increased to $2.3 million for the quarter ended September 30, 2007 from $2.0 million for the comparable period in 2006.
Research and development expenses, primarily consisting of costs associated with development of new products, increased to $0.9 million for the 2007 quarter from $0.7 million for the comparable period in 2006.
Other income increased to $0.5 million for the third quarter from $0.0 million for the comparable period in 2006 as a result of a breakup fee awarded to the company resulting from its participation in the bidding process for a potential acquisition of a competitive golf club manufacturer.
